Adjusted net pension liabilities for the 50 states spiked in fiscal year 2017, increasing to $1.6 trillion because of poor investment returns for fiscal year 2016, said a report from Moody's Investors Service.
Total state ANPL, or unfunded liabilities, for fiscal year 2017 reached $1.6 trillion, or 147.4% of state revenue, up from $1.3 trillion and 122%, respectively, in fiscal year 2016, the report said, due to a median return of 0.54% for fiscal year 2016.
However, that unfunded liability is expected to improve in future reports due to the impact of positive investment returns for fiscal year 2017 (a median 12.4% for U.S. public pension plans) and for fiscal year 2018 (a median 8.2%). The report did not provide a median return for fiscal year 2016.
The greatest percentage increases in adjusted net pension liabilities for fiscal year 2017 came from Delaware, Hawaii, Oregon and South Dakota, which each grew by more than 60%. States that saw their unfunded liabilities grow by less than 5% included Michigan, New York, Utah and Washington.
Among all states, for fiscal year 2017, Illinois' unfunded liabilities lead the pack as a percentage of state revenue. The state's unfunded liability for fiscal year 2017 was 600.9% of state revenue at $250.1 billion, followed by Connecticut at 359.8% ($71.2 billion in unfunded liabilities), Kentucky at 331.7% ($48 billion), New Jersey at 290.4% ($116 billion) and Maryland at 262.7% ($62.8 billion).
In an earlier report in August, Moody's Investors Service estimated that adjusted net pension liabilities for U.S. public pension funds fell 5% in fiscal year 2018.
Timothy Blake, managing director-public finance, and Pisei Chea, analyst, could not be immediately reached to provide further information.